Increase in Minimum Wages

18 June 2013

The Minimum Wage Panel established under the Fair Work Act 2009, headed by the President of Fair Work Australia and comprising of six other members, handed down its decision on 3 June 2013 after conducting its Annual Wage Review 2012-2013.

The main thrust of the Panel’s Decision is that, as from first pay period commencing on or after 1 July 2013:

• the minimum weekly rates of pay contained in both Modern Awards (i.e. which came into effect from 1 January 2010) and transitional instruments (which include old Awards which applied pre-1 January 2010 and which may still apply to various sectors, e.g. Local Government in Victoria) will be increased by 2.6%;
• the casual loading for employees who are not covered by Awards or Enterprise Agreements has been increased from 23% to 24%;
• the national minimum wage for Award/Agreement-free employees whose productivity is unaffected by disability has been increased by $15.80 per week or $0.41 per hour to $622.20 per 38 hour week or $16.37 per hour.  Award/Agreement-free employees whose productivity is affected by a disability will be paid in accordance with an assessment under the supported wage system applied against the national minimum wage rate.

The Panel said that it took the 0.25 percent increase in the superannuation guarantee into account in determining the level of increase in minimum wages in the Review. However, the Panel did not specify a direct, quantifiable, discount to the minimum wage increase.

How this might affect you and what should you do?

• If you have an Enterprise Agreement which provides for above-Award rates, then these increases will be absolved into the differential.  However, you should check that the rates contained in your Enterprise Agreement are equal to or higher than the new Award rates (i.e. including the additional 2.6%);
• If you do not have a Enterprise Agreement and are therefore covered by a Modern Award or transitional instrument, then ensure that you implement the wage increases to the minimum rates of pay as from the first pay period after 1 July 2013, after taking into account the transitional phasing-in arrangements contained in Modern Awards;
• Ensure that the 25% loading applicable to casual employees covered by Modern Awards are payable on the new minimum wage rates;
• Ensure that the new casual loading of 24% is paid to your Award/Agreement-free casual staff;
• Ensure that any industry allowances (as opposed to expense-related allowances) contained in a Modern Award which applies to your business are increased commensurately by 2.6%;

Although allowances in transitional Awards have not been adjusted and have remained unchanged since October 2008, you should still check your Enterprise Agreement to see if there is a clause dealing with the treatment of allowances.